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Tech Predictions For 2008

Column: The Bleeding Edge

From the Jan./Mar. 2008 Issue

Just when we thought that 2007 would only be about politics and gas prices,
along come three devices that turn their respective industries on their ears
and make us once again pay a little attention.

What three technologies? Well, many would qualify this year, but my top three
would have to include the following: the iPhone, which has completely revolutionized
how we think of cell phone converged devices; external hard drives, which truly
came into their own in 2007 to re-energize the backup and archiving industries
with low costs and high ease of use; and micro computing devices, which showed
much promise in 2000, lay stagnant last year and then came roaring back this

All three devices became hits in 2007 out of necessity and consumer demand.
Years of poorly built, error-prone and underpowered smartphones had left most
consumers howling in outrage while the cellular service companies yawned and
pushed yet more junk into the marketplace. The iPhone not only brought to market
Apple’s trademark quality, but a redesign that has sent handset manufacturers
running back to the drawing board. A new model promised in 2008 will enable
some type of PC synchronization and access to faster Internet speeds —
both updates designed to maintain the iPhone’s status as the year’s
Killer App.

The backup and archiving market is being driven by a host of market forces
— Sarbanes Oxley requirements, legal precedents and cost-cutting efforts
among them. But where small businesses were once stuck with a simple choice
of diskette backups or tape, a new generation of hard drives has made securing
data on backups a nearly effortless process. It is no coincidence that the two
scientists who led the development of faster, better and larger drives took
this year’s Nobel Prize for Physics.

Road Warriors have always complained about the size and weight of laptop computers,
but they never really saw enough inconvenience in them to switch to something
smaller. That started to change in a post-911 world, where having less to carry
on the airplane and through security checks became more important. At the same
time, the new generation of Internet-capable devices (like the micro PC from
Viao or the new generation of computers with 10-inch screens) makes it less
awkward to carry and use smaller devices. A lower price tag doesn’t hurt
their sales, either.

Likewise, there were some technologies that stumbled. Wi-Fi was finally recognized
as not being the path of free unlimited bandwidth, and WiMax showed its first
signs of stumbling as investors came to realize that it could neither live up
to its hype nor be as cheap as consumers want. Voice over IP (VoIP) telephone
calls lost much of their luster as Skype hit performance problems and Vonage
fell prey to patent law. Blu-Ray technology fell on its sword as an increasing
number of companies rallied behind the competing DVD-HD standard. Finally, 2007
was a bad year for memory cards, which continued to suffer from far too many
sizes and standards (memory stick, memory stick pro, SD card, mini-SD card,
micro-SD card, CF card, etc.).

As for Kent Associates, our lab rats took their best shots at a forecast for
2007, and did not fare too badly:


PREDICTION: The cable mergers will be in full swing.
ACTUAL RESULTS: Some mergers and acquisitions did occur,
but not nearly on the scale predicted. The cable giants got bigger by eating
up smaller competitors but did not merge with one another. Today, those
mergers seem less likely, as does a cable acquisition of Sprint or T-Mobile.
The markets have moved on.
SCORE: 0.5

PREDICTION: Monitor and TV prices will continue to fall.
ACTUAL RESULTS: Not even I predicted how far they would
fall. Far enough to make the major manufacturers like Sony squeal in pain.
Low price leaders Vizio and Olevia have led the way, but other brands have
followed. The new technology of DLP, along with improved plasma screens
that suffer less from pixel burnout, have also helped take prices down by
as much as 50 percent in the last year alone.
SCORE: 1.0

PREDICTION: PCs will still be here.
ACTUAL RESULTS: The annual prognostications of the demise
of the PC — to be replaced by cell phones, implants or other devices
— has never happened and likely never will. The big trend today is
a return to the micro-PC with a smaller footprint and integrated PC/Monitor
combinations. Both have better performance than ever.
SCORE: 1.0

PREDICTION: Spam will get worse. Much, much worse.
ACTUAL RESULTS: And the forecast is that it won’t
improve any time soon. While Asia and the Eastern European nations house
most of the servers pumping out spam, the originators are largely here in
the United States. Spam now accounts for more Internet traffic than legitimate
e-mail. Filters, anyone?
SCORE: 1.0

PREDICTION: CRM will dominate business software.
ACTUAL RESULTS: Dominate may be putting it a little strongly,
since we have seen in 2007 the rise of software for corporate performance
measurement (CPM). Nonetheless, there is no question that CRM, and especially
CRM integrated into the more substantial accounting systems, has made strong
inroads in 2007. Balancing those inroads is the solemn truth that measuring
performance has to trump the more squishy benefits of relationship management.
SCORE: 0.5

PREDICTION: Consumer electronics will get easier.
ACTUAL RESULTS: This was probably a “gimme,”
since one of the purposes of consumer electronics is to make the technology
easier to use. That said, I am impressed with the strides made in television
remotes, in combination DVD/CD devices, and in digital synthesizers that
take the complexity out of surround sound. Elsewhere, GPS systems have gotten
both cheaper and easier to use, and even the worst of the cell phones are
getting more user friendly.
SCORE: 1.0

PREDICTION: Privacy will become a “big thing.”
ACTUAL RESULTS: Perhaps not in the way that most people
expected, but with the departure of Attorney General Gonzales much of the
impetus in peeking at the data of Americans has been lost. No new laws have
been passed, and the loss of privacy on the mega-portals is still a threat.
But awareness is greater than it was last year, as it should be.
SCORE: 0.5

PREDICTION: Satellite broadband will jump-start rural
ACTUAL RESULTS: “Jump-Start” may be an overstatement,
but with two new satellite in orbit and a third on the way, satellite Internet
access is a true gift to areas not reachable by cable or DSL. I’m
working on a satellite system as I write this, but I am not alone. In fact,
Kentucky will give its rural residents financial incentives to use satellite
broadband in 2008.
SCORE: 1.0

PREDICTION: Vista (yawn!) will finally arrive.
ACTUAL RESULTS: It was neither as awful as some predicted
nor as wonderful as Microsoft wanted us to think. But it is a stable, feature-packed
operating system that is a worthy progeny of the Windows lineage. If Microsoft
would stop obsessing about becoming a content company and focus on better
applications (like a truly useful media player, which WMP 11.0 is not),
it would be perfect.
SCORE: 1.0

PREDICTION: Fiber will dominate discussions on broadband.
ACTUAL RESULTS: I only wish we were there already. Fiber
to the home is the single hottest ticket in America today, with ultra-high
speeds and other benefits as yet undreamed of. Most broadband companies
are deploying fiber as quickly as they can, and the United States currently
has a lead in this area. You could only wish it was available in your area
SCORE: 1.0

All told, a rating of 8.5 — a little better than our usual 80 percent,
but still not the best year we’ve had as prognosticators. Many of the
predictions may seem to have been too easy to guess at, given the trends. But
in 30 years of technology chasing, we have seen more trends die than come to
fruition. So with a year in which to wobble, we can’t feel too badly about
the few we didn’t hit dead-on.
On to the coming year.



Energy-efficient lighting will catch on.
Anyone who grew up with the fluorescent lighting of the sixties and seventies
remembers with some horror the pale, ugly lights that made everyone within
their illumination look like extras from the set of “Night of the
Living Dead.” But with lighting in general pushing for more natural
colors and higher efficiency, new bulbs are moving onto the store shelves
that promise to give better light longer at a lower cost … and make
you look good, as well. This (2008) is the year to replace those dreadful
office lights with something better.

Payroll Services Will Become Less Lucrative.
I seem to be about the only one in the accounting biz who believes this.
After all, they note, doing payroll is increasingly a lucrative business
with high value added for the client, right? Well, yes. But then, the Titanic
was the best ocean liner on the seas until it hit that ice cube. Here’s
what makes me cautious about payroll services in the years ahead: a) it’s
not rocket science (for the vast majority of companies, it is a pretty simple
matter to calculate payroll on a PC and file the taxes); b) there are no
real facets that demand the intervention of a trained professional; and
c) the true spoiler here is that every bank in the country is now offering
payroll services. How do you compete with a bank that can do it faster,
at a lower cost and with less hassle?

Free Wi-Fi will be available in more places.
The dream was that somehow people would pay outrageous amounts of money
to connect to the Internet in taxis, on the train or while waiting in line.
Consumers turned out to be not quite that stupid, and most of the operations
based on that model (including municipal Wi-Fi covering entire cities) fell
flat. But a curious backward trend seems to be emerging — free Wi-Fi.
It is cropping up in hotel lobbies, supermarkets and at the airport. The
last one is especially significant in that airports seem to now understand
that people who don’t want to pay an arm and a leg for access still
appreciate having it available while they wait.

There will be a technology scare backlash.
We’ve spent the last several years being terrorized by our technology.
With the tacit support of government agencies, the media and assorted snake
oil salesmen, we have been led to believe that technology in general and
the Internet in particular are big, scary places wherein we should fear
to tread. Unfortunately, the data contradicts. It turns out that while the
government claims that one out of every seven kids online has been solicited
for a sexual conversation, it is usually from peers. The total number of
kids surveyed who actually had contact with a predator: none. Likewise are
the scares about identity theft. While some 4 percent of the population
was victimized by some sort of identity theft in 2005, only about 10 percent
of these — 0.4 percent of the population — actually suffered
any kind of real financial loss. Consumers are getting fed up with the scare
tactics used to sell Internet filters and credit reports. As well they should.

The candidates will not be kind to technology.
This year (2008) will be a major election year, and virtually every candidate
for major elective office will have a “tech strategy.” But since
few of the candidates actually understand the technology, the strategies
are most likely to be based on polls and financial gifts to tech companies
like more H-1 visas for tech workers. So far, few have had much to say about
the conversion to digital TV, deployment of fiber and other forms of broadband,
or investment incentives to spur the next generation of technology. Nor
will they, in all likelihood. While technology is the driving force for
our economy, it doesn’t garner many votes or campaign dollars.

Home technologies will move to the forefront.
It’s not just a stagnant housing market that will drive homebuilders
and owners to put more technology inside the home. The movement to go “green,”
the demand for multiple phones, televisions in every room of the house,
the need for Ethernet networking and cable outlets in every room, and rapidly
improving kitchen technologies will spearhead the demand for more. DIY tools,
which have improved vastly in the past decade with such devices as laser
lights and digital monitors, will likewise undergo a renaissance as people
push to add value to their homes.

Macintosh computers will lose some of their luster.
It would seem that Apple can do no wrong, with the smashing success of both
the iPod and the iPhone. But that illusion will quickly be shattered if
the company stumbles with its core Macintosh computer line. The company
has had a two-decade run making fun of the PC, based in part on the belief
that the Mac is easier to use and safer from viruses and hackers. Neither
statement is accurate in 2008, leaving the company vulnerable if it is unable
to better defend its reputation. Our bet: The Mac is just another machine,
and the marketplace is a pretty level playing field. As much as we like
the Mac, the odds say it will stumble with the release of a new operating
system and growing security woes.

Bluetooth will actually work.
Though it’s based on a pretty good technology, Bluetooth has neither
lived up to its hype nor gotten the engineering attention it deserves. Most
of the headsets are weak, low volume, poorly integrated devices that leave
people holding one hand to the side of their heads to keep it in place or
simply throwing it away within a few weeks after purchase. The problems
with Bluetooth implementation are legion — bad software, clunky recharging,
lack of stereo and lack of music support. All of that will change in 2008
as personal technology takes the forefront for the first time ever. Consumers
will demand Bluetooth that works, and that works with all of the applications
they use. The first company to make a good, low-cost converged Bluetooth
unit wins.

Video on demand will become viable.
The past year has seen services come in like lions and depart like lambs
— AOL’s movie download service is the most recent to come to
mind, though others have stumbled, as well. But that was before gas hit
$3 per gallon and milk $5. The cascading effect of higher food and energy
will be a loss in revenue to theatres and restaurants in favor of entertaining
at home. Chafing dishes and fondue pots will make a comeback. Wine sales
will increase, while beer consumption drops. And people will watch more
movies at home, spurring video-on-demand services to become more real. Jeff
Pulver promises to make his Pulver 24/7 service a reality, but my money
is on the major studios who actually own rights to the films.

Internet connections will be awful.
They’re not great now, what with outages, slowdowns and ISPs who throttle
back throughput if they don’t like what you are downloading. But the
problem will be much worse next year. The problem is not the Exaflood, that
over-hyped crisis of too many videos and files on the Internet. Rather,
it is the desire to do more with an infrastructure that has been largely
ignored in the past decade. The problem isn’t at the Internet backbone,
or at the logical junctions in the Internet architecture. It is in the last
mile that runs to your house or office. The last mile is the slowest point
of the Internet, and also the place where companies are most hesitant to
invest. This is partly because they can’t recover that investment
and partly because of the continuing legal battles being waged over who
should have the right to what little profit is to be made. In the coming
year, you will be able to measure the time for websites to load in minutes,
not seconds.

So those are the trends. We’ve tried to stay away from company-specific
predictions, like the continuing demise of AOL and Earthlink, the slow downward
spiral of Motorola, or the likelihood of impending catastrophes at both Google
and Apple as they reach beyond their means.

Nor have I addressed the changes in the accounting software industry, as accounting
software companies fight for the SMB markets and fixed asset management software
tries to figure out how to get closer to the general ledger. These are topics
better handled on a month-by-month basis — as we will begin doing after
tax season.